The History of Energy Efficiency

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The History of Energy Efficiency The History of Energy Efficiency Alliance Commission on National Energy Efficiency Policy JANUARY 2013 TABLE OF CONTENTS INTRODUCTION ............................................................................................................................................................. 3 HISTORICAL ENERGY PRODUCTIVITY TRENDS IN THE US ........................................................................................ 4 Federal Policies ThaT imPacT energy eFFiciency: 1975 - PresenT ................................................................ 8 FEDERAL ENERGY EFFICIENCY POLICIES BY TOPIC AREA ........................................................................................ 11 ENERGY PRODUCTIVITY COMPARISON .................................................................................................................... 12 U.S. States .......................................................................................................................................................... 12 International Comparisons ................................................................................................................................ 14 CONCLUSION ............................................................................................................................................................... 16 CASE STUDIES AND BEST PRACTICES ........................................................................................................................ 17 Local ................................................................................................................................................................... 17 State ................................................................................................................................................................... 19 International ...................................................................................................................................................... 21 Utility ................................................................................................................................................................. 24 Industry.............................................................................................................................................................. 26 DENSO Manufacturing ....................................................................................................................................... 26 Bibliography ....................................................................................................................................................... 27 Alliance Commission on National Energy Efficiency Policy The History of Energy Productivity 2 INTRODUCTION For the purposes of this report, energy productivity will be defined as “measuring the output and quality of goods and services generated with a given set of inputs. Energy productivity is the inverse of the energy intensity of GDP, measured as a ratio of energy inputs to GDP.”1 To properly project and channel the future of energy productivity in the United States, we must first look back at over forty years of the history of energy use in the nation. We also need to examine the role played by energy efficiency policies, including their successes and shortcomings. The energy challenges faced in the 1970s, 1980s, and 1990s provide experiences and lessons likely to apply in coming decades. The history of energy efficiency in the U.S. provides a vital reference and guide to any future national energy-efficiency strategy. The Alliance to Save Energy’s Commission on National Energy Efficiency Policy (ACNEEP) established a goal of doubling U.S. energy productivity by 2030 relative to 2011. The Commission seeks to identify policies and actions that will double the amount of economic output derived per unit of energy used in the U.S. economy. Economic outputs include both the quantity and quality of production and economic activity. A more energy productive economy should be a more economically productive economy that delivers a higher quantity and quality of goods and services while enhancing incomes, employment, and quality of life for Americans. Improving energy productivity can be thought of as getting greater bang for each energy buck spent. Over the years, federal and many state and local governments have adopted a broad array of public policies aimed at increasing energy efficiency and productivity. The rationales and policy instruments have varied by time and place, with some common themes, including using government policy to reduce energy costs and cost volatility, avoid or defer investments in higher-cost energy supply options, enhance energy security and reliability, shrink the environment footprint of energy production and delivery, and stem the flow of energy-related expenditures out of a region’s economy. By necessity, federal policies for energy efficiency have tended to focus on product standards and fiscal tools, which affect the efficiency profile of products and investments that enter the market. For example, federal policies include appliance efficiency standards, vehicle efficiency standards, and tax incentives for private firms to make an investment in a more efficient product. By contrast, state efficiency policies have tended to focus on things more directly in their jurisdiction: energy efficiency provisions in building codes; land-use planning tools and support for public transit to slow growth in vehicle trips and vehicle miles travelled; state tax incentives; and programs operated by electric and natural gas distribution utilities to enhance consumer adoption of efficiency measures. Time and again the business case for energy efficiency is supported through real economic savings. Without the numerous energy efficiency improvements made since 1973, the U.S. would require about 50% more energy to deliver our current GDP.2 The adoption of more efficient products and services is responsible for 60% to 75% of the increase in energy productivity since 1970.3 While every region in the country has shown leadership in some area of energy efficiency, California, the Northeast and Mid- Atlantic regions,4 parts of the country with some of nation’s highest energy prices, have made some of the greatest progress in improving energy efficiency .. Despite significant past progress, great potential remains to improve the energy-efficiency policies and programs in every state, which can help drive further large increase in U.S. energy productivity. Recognizing the differences in the structure and features of different regional economies and climate zones across the U.S., these opportunities for adoption of policies to support greater energy efficiency investments and actions are strong in states with high energy use per unit of economic product, per square foot of floor space, per capita, or other measures of energy intensity. Before delving into the history of U.S. energy efficiency policy, it is relevant to look at how the Alliance has contributed to doing more while using less energy over the last thirty-five years. In 1978, the Alliance launched its first national TV public service advertising campaign with Gregory Peck promoting energy conservation by declaring “Don’t Blow it America.” Jumping to the 1980s, the Alliance initiated new research programs promoting energy efficiency in private markets through innovative methods, designed the first methodology to evaluate energy efficiency as a resource for public utilities, and helped nonprofit organizations across the country finance efficiency improvements through pooled performance contracting. 1 Farrell, Remes, and Charles, “Fueling Sustainable Development,” 8. 2 Alliance to Save Energy, “American Energy Initiative.” 3 Mims, Bell, and Doig, “Assessing the Electric Productivity Gap,” 7. 4 Hendricks, Campbell, and Goodale, “Efficiency Works,” 25. Alliance Commission on National Energy Efficiency Policy The History of Energy Productivity 3 The 1990s was another productive decade for the Alliance with the launching of its corporate partnership Associate program, its international program, and the Building Codes Assistance Project (BCAP). At the same time, the Alliance contributed to energy- efficiency provisions in the National Affordable Housing Act of 1990 and the Energy Policy Act of 1992 and helped secure a $45 million increase in funding for federal energy-efficiency programs in 1998. Since the beginning of the 2000s, the Alliance has advocated for energy efficiency at the federal, state, and local level. Among important recent milestones are: » helping negotiate rules to increase the efficiency of clothes washers 35% by 2007; » instituting the Power Save campus program to introduce energy efficiency concepts in California universities; » ensuring strong energy-efficiency provisions in the federal Energy Policy Act (EPAct) of 2005; » launching the Drive Smarter Challenge consumer campaign, designed to encourage fuel efficient driving; » helping create the Clean and Efficiency Energy Program (CEEP), an initiative with public power partners that promotes energy efficiency investments by public power utilities; and » establishing the Alliance’s Commission on National Energy Efficiency Policy.5 HistORICAL ENERGY PRODUCTIVITY TRENDS IN THE US Over the past forty years, the United States made significant gains in energy productivity. U.S. economic output expanded more than three times since 1970 while demand for energy
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